The Return of the 5% Muni Bond

The recent selloff in the bond market has left municipal bonds at strikingly attractive levels. How to find yields equivalent to 8% on taxable bond.

The sharp selloff in the municipal-bond market has produced 5% yields on many long-term issues, up from about 3.5% at the start of this year.

Yields are even higher—at about 7%—on many closed-end muni funds that boost their yields with some financial leverage. Intermediate-term munis with 10-year maturities are yielding about 3%, and so is the...